Lars Larson on Taking the Kicker

Taking the public’s kicker was a bad idea then and it’s a bad idea now. Stealing the taxpayer’s money and their overpaid taxes is not ethical, it’s not legal, and it’s not constitutional.

We hear that the government needs our money more than we do. They do not. We hear that they will spend it better than we do. They won’t. We hear that if the government spends your tax dollars in the economy it will stimulate the economy more than if you spend those dollars. That’s bunk.

The government is famous for wasting your tax dollars and one reason they do that is they don’t have to work to produce those tax dollars. You do. So, when they waste them, they don’t feel the pain. You do.

The kinds of things you spend your money on, goods and services, make more jobs, producing more goods and services. The government often spends money on things that don’t generate a single extra job.

Let’s turn down this latest effort to get rid of Oregon’s tax kicker law.

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Posted by at 09:00 | Posted in Measure 37 | 22 Comments |Email This Post Email This Post |Print This Post Print This Post
  • David from Eugene

    First, the kicker is a prize that tax payers get when ever the State Economist guesses wrong on how well Oregon’s economy will do in the next two years. It is not a matter of the tax payers “overpaying” their taxes, the tax rates are the same in good and bad economic times. Just in good economic times tax payers generally have greater income, thus pay more in taxes.

    Second, it is bad public policy. While taxes go up and down with the economy, with the exception of safety net services, the need for basic government services doesn’t. The State Police, prisons, the parole and probation system, the courts, schools, the University system, the State Park system to name a few that need to be funded regardless of the economy. We need to be putting away money in good years so we have it in bad years.

    Third, it is not the way to reduce taxes. IF the state government constantly runs a surplus, is properly funding all governmental services and has a rainy day fund that is full to overflowing, that is an indicator that Tax rates are too high. The way to reduce taxes is not to send the extra money back, it is not to collect it in the first place and that is done by reducing tax rates.

    • eagle eye

      Well put, David. The idea that misestimating tax revenues on the low side (which is how the kicker arises) constitutes “overcharging” the taxpayers is one of the silliest I’ve ever heard.

  • Reason

    PERS has over 28 billion dollars in it, in this time of economic downturn the government should borrow from it. They could guarantee to pay it back with interest when the economy comes back around.

    I’m sure the employees would have no problem re-investing some of this money into the state that gave it to the originally.

    This is a much more desirable method than stealing the kicker from every Oregon citizen. They passed that law and regardless of whether a few people like it or not, it is the law. Any tampering with it will no doubt bring both a court challenge , it will also bring a initiative to over turn any unconstitutional change.

  • Bob Clark

    I would trade the “kicker” for a reduction in the marginal income tax rate currently set at 9%. The “kicker” is kind of a convoluted tax mitigation mechanism. It could actually be managed by an astute state government by changing the official revenue forecast and spending levels. So, citizens could offer a trade instead, and frown on its representatives deciding single handly to steal it from tax payers.

  • Joe

    You people are all crazy. The “kicker” is your money. If you don’t want it send it to me.
    The state does not need the money. It is money that has been over collected. It is only right that they return it.
    This level of misunderstanding is embarrassing.

    • David from Eugene

      Joe

      Exactly how is the kicker the result of the State overcharging? Unless you are miss figuring your state taxes, the amount of taxes due on your income is the same regardless of the accuracy of the State Economist’s economic prediction.

      • Rupert in Springfield

        >IF the state government constantly runs a surplus, is properly funding all governmental services and has a rainy day fund that is full to overflowing, that is an indicator that Tax rates are too high.

        Why in the world is government somehow entitled to have everything their hearts desire “properly funded” and an overflowing rainy day fund?

        Few of the people who actually work and pay the bills for government nonsense exist in such an economic reality. Given Salem’s legendary irresponsibility with money, I see no reason why they should be entitled to such privilege.

        Government is a dependant. It exists from the largess of those who work to pay for it. Thus it is not for government to deign when it has sated its spending sprees, or when it has stockpiled enough for future binges.

        Rather it is for the people to decide if they see government spending in a way that indicates frivolity or seriousness. A simple example would be Davis Bacon act wages. Government elects to keep paying ridiculously inflated wages, rather than market rate. That is a clear indication that fiscal needs are not dire.

        Government needs more money to waste?

        Cry me a river.

        Don’t come whining to me about needing more money when everyone saw their 401k’s get cut in half, yet government is still guaranteeing some schlub on PERS their 8%. Don’t expect sympathy from people losing their jobs while you continue to pay janitors $50k a year.

        • dean

          Rupert…I know you will hate this, but people…as in us…are as dependent on government as government is dependent on people. Before you go off ranting at me, take a moment to think about it. From time immeorial people have lived in groups…clans, tribes…villages, cities…states…empires. All along there have been rules, first customs, later laws. And all along there has been individual effort and collective effort. And taxes or their equivelant.

          The dependency is mutual. There can be no government without people, and no people (surviving for very long) without government. And individuals are just as prone to waste money as is government. See Beanie babies….bubble as only one example. Does goernment need more money to waste? Sure. Do you? Yes again.

          As for the kicker and the right amount of government spending, David from Eugene has it exactly right.

          • Rupert in Springfield

            >Before you go off ranting at me, take a moment to think about it.

            I’m sorry if you find my pointing out your usual diversionary tactics, logical fallacies or your ugly racialism to be frustrating. However mistaking such things for ranting probably points more towards poor debate skills on your part rather than inflamed emotions on mine.

            >The dependency is mutual. There can be no government without people, and no people (surviving for very long) without government.

            On what planet? Our very country was founded on throwing out a government ( King George ). We got sick of that government and put in a new one. As far as I can tell, we continue to survive without the throne being in charge. Looks like a pretty clear case of dependency if you ask me.

            Seems to me history is replete with examples of governments collapsing or being overthrown. Not a lot of examples of governments growing big and the people all leaving and the government continuing to chug along without them.

            If you have a case of government existing without a populace Id love to hear about it. I just simply cant think of a single example of such a thing.

            My point is that there is no compelling moral argument that government is entitled to live outside of the same economic realities the population faces. When it has insisted on such a position, government has a tendency to be overthrown or collapse. You take issue with that? Or are you arguing some point that is not in contention?

          • dean

            No, your rants don’t frustrate me. I was just trying to get you to stop and think. Unsuccessfully as it turned out.

            Yes…well you made my point. We threw out a government and replaced it with a government. Why didn’t our wise founding fathers throw the British out and replace them with….well nothing?

            Yes…history is replete with governments collapsing and being overthrown. History is also replete with breakdowns into anarchy…e.g. no government…such as in somalia at the present time and the aftermath of the Roman Empire. Not fun places to live as it turns out, and Maslows heirarchy is proven out.

            You are arguing half a loaf. Government needs people and people need government. A person could exist for a while without a government if he or she has a good rifle, lots of amunition manufactured by others, and a store of canned goods probably canned by others and FDA inspected. A people cannot.

            No…there is no *moral* argument about government living outside the economic realities their population faces. But there is a *practical* argument why government does, can and even should live outside of those realities. Government regulates and prints money. If the population does that it is lillegal, and for very practical reasons. The argument that rising unemployment means the government should lay people off is like cutting off our noses to spite our faces. It would mean piling more people into unemployment lines for private sector jobs that don’t exist.

            By the way…our chosen method, laid down by the founding old white dudes, is to change government in elections. Last I looked we just did that. We don’t need to resort to “overthrowing.” Collapse is always a possibility.

          • Rupert in Springfield

            So much for giving you the benefit of the doubt. I thought for a moment you might actually be trying to argue the point I was making, not doing your usual juvenile tactic of extending the specific to the general

            Maybe this sort of argument works at the kiddy table, but not with me.

            Now please, argue the point.

            Please point out a single government that has ever existed independent of a population it once governed.

            That’s what you would need to show government non dependence.

            I have given several examples of government dependence on the populace. You have not given a single example to counter that and have instead argued a fallacious case that was not in contention.

            >Collapse is always a possibility.

            Actually its quite a distinct one. Government collapse due to over taxation of the populous being one of the most common forms of fall. Those who will not learn from history are condemned to repeat it, and on history, liberals tend to be incredibly ignorant. Why else would they be the only ones still thinking Socialism works!

          • dean

            I said…no government without a people, and no people without a government. Why would I show you an example of something I never claimed existed?

            How about you show me a people without a government, since you seem to think this is a possibility?

            And how about you show me how government laying people off in a recession is going to help anything?

  • devietro

    I personally think that there should be a trade off made, in exchange for the State having MUCH stronger rules against stealing the kicker the citizens agree to raising the threshold to say 3% or maybe even 3.5%. I fully agree that its my money and I should get it back BUT a 2% margin of error when your forecasting 2yrs in the future is pretty unreasonable.

    • Davis

      Hogwash!! Businesses routinely plan five or even ten years out in order to secure funding. The value of a company’s stock can tank if it’s revenue and profit miss the mark by even one-half of one percent. A two-percent cushion is a perfect example of the old put-down, “Close enough for government work.”

  • Davis

    The level of ignorance regarding the kicker here is astonishing. From the assertion by *David from Eugene* that the kicker is a “prize” and an improper way to reduce taxes to the ideas put forth by *devietro* and *Bob Clark* of eliminating the kicker in favor of a lower “marginal” tax rate or higher threshold, I infer that, for some odd reason, many in this thread believe that the kicker is an evil limitation on the ability of Oregon government to take in adequate revenue and exercise adequate power.

    The sole purpose of the kicker is to limit government spending. It has no connection to tax rates or collections — lowering the tax rate to the 7% base rate, or even lower, would in no way lessen the need for the kicker. It has absolutely no impact on government’s budgeting. But by forcing government to return all revenue above what it budgeted for itself, allowing for a 2% cushion, the kicker holds government to its pledge. Can you imagine the euphoric atmosphere in a special session called to spend the windfall revenue were there not the limitation imposed by the kicker clause in the state’s constitution?

    Despite what the governor and Dems in the legislature try to claim, the kicker is not revenue lost to government. The state economists make several good-faith projections about biennial revenue during the months immediately preceding and during the session (the most important one coming in May) that legislators use to set the budget. Because they know that that is all they have, whether or not those projections undershoot what actually comes in, legislators must exercise a certain amount of discipline — the same kind of discipline they, along with every other resident of the state, should exercise at home.

    Have you never noticed that we do not receive kicker rebates every two years? That’s because usually the projections are pretty accurate. Yet, at the same time, state spending continues to expand at rates far above what anyone could call conservative. So as *Rupert in Springfield* says in response to the claim that the state needs more money, “Cry me a river.”

    The legislature’s real problem has always been the inability to set proper priorities. *David from Eugene* could not be more wrong when he says that the kicker is bad policy. Also, his inclusion of schools and the University system, and parks in his list of “basic government services” shows just how deluded he is in regard to understanding the fundamental role of government. Aside from the fact that the state of Oregon has never hurt for revenue, all of the issues he raises in his post #1 are budgetary issues; in other words, if the legislature truly believes that particular services are core components of state government and that they should put aside some money into a “rainy day fund”, they need to act upon that belief and budget for them. Every single legislator who voted last session in favor of stealing the portion of the kicker that was due to businesses should be tried for and convicted of grand theft.

    • David from Eugene

      Davis

      First of all the tax payers only get a kicker payment when the State Economist makes a mistake and under predicts the amount of state revenues that will be collected during the upcoming biennium. He makes a mistake; the tax payers get the reward, sounds like a prize to me.

      Second, the kicker is not evil, it is just a very bad way to reduce the amount of taxes an individual or corporation pays. The only way it could be made worse is to implement the other side, and enable the Department of Revenue to levy additional taxes to make up the short fall when ever the State Economist under estimates State Revenues.

      Third, over the long term the kicker does not curb government spending. What it encourages is bad estimates and poor budgeting practices.

      Fourth, the kicker payment is properly collected revenue lost to the government. The kicker is taken from money collected from taxes on income collected in accordance with adopted tax laws and properly promulgated Administrative Rules. Whether the State Economist guesses right or wrong does not affect the manner that state taxes are collected nor the tax rates imposed.

      Lastly, cuts in government revenue, regardless of cause, do not encourage the establishment of proper government priorities. In fact it tends to do just the opposite, as the most common response is to “share the pain” through “cross the board” budget cuts.

      There are two realities that many Conservatives overlook. The first is that every State Program is there because either a majority of the voters casting ballots in an election voted for an initiative creating it or a majority of the members in each house of the legislature voted for it and the governor signed it. And in most cases the legislation is a result of a lobbying effort on the part of groups with sufficient political power, be in the form of contribution, number of supporters or both, to sway a majority of the Legislature and the Governor. Further while the Governor and Members of the Legislature may not be the people that these Conservatives would like to see in office they did receive at least a plurality of the votes cast for that office during the last election for that seat or office.

      Second, the demand for many government services is not linked to the amount of money available to pay for them and for those services where a link does exist it the economic conditions causing an increase demand for them often also causes a reduction in the amount of money needed to pay for them.

      And to anticipate a question or two; no. I do not like paying taxes and no, I do not support every State P,ogram. There are State Programs I would like to see curtailed or eliminated. I am currently involved in an on-going attempt to change a state program under which State and local agencies are required to purchase particular products and services from particular vendors without bidding. A $50-80 million dollar program in which the state agency responsible for its administration has never, in the programs 32 year history, bothered to verify the eligibility of participating vendors.

  • eagle eye

    ‘… inclusion of schools and the University system, and parks in his list of “basic government services” shows just how deluded he is in regard to understanding the fundamental role of government. …’

    So, I take it that you don’t think Oregon should have public schools? Public universities?

    The University of Oregon, I believe, has been a public (state) university since its founding in 1876 — most of Oregon’s state history (which begain in 1859).

    Do you think that the people of Oregon have been “deluded” (your word to Dave) all that time?

    • Davis

      You do not find in the charter documents of either the United States or Oregon that funding of schools is a basic government responsibility. That task was thrust upon governments only in the late 1800s through the advocacy of Horace Mann. That was the beginning of the decline of education in the United States.

      I believe that we would be far better off if we returned to a more privatized model as existed for the first 200 years of our history. But regardless of whether government continues to play a dominant role in education or reduces its role in favor of some kind of privatizing, providing schools is not a basic function of government. The delusion that it is comes of more recent vintage.

      • eagle eye

        Well, maybe the people of the United States have been deluded for almost a century and a half. Perhaps someday the University of Oregon will be privatized. I know many people there — faculty — who think that would be a good idea.

        Maybe abolishing the public schools (and I take it, public subsidies for education) would be a good idea, too.

        But I wouldn’t hold my breath waiting for any of this to happen.

        Really, sometimes one can live in such a dream world that there is a danger of becoming delusional.

      • dean

        Ah for the good old days. Prior to compulsory public education the illiteracy rate was 20% in the US, probably higher since that was a self reported number. Afterward the rate decreased steadily to where it is now around 0.5%.

        So returning to your private model would bring our illiteracy rates back to 20%? Now that would be great. And think of the money we would save on schools. OK…we would spend it on prisons instead, but so what?

        • eagle eye

          dean, what makes you think the illiteracy rate can’t go to 50% or higher? After all, there have been great improvements in the efficiency of private markets since the 19th century!

          • dean

            I was sticking to known facts and avoiding speculation…but yes, modern private markets are clearly superior to public goods in all respects these days. So they could out-perform the 19th century and end up with even more illiterate people. I get it.

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